Unco-operative: Board rebels may SAY they’ll back crucial reforms to preserve their £80k-a-year jobs - then do nothing, warn campaigners

Reformers hoping to overhaul the battered Co-operative Group fear their plans could be stymied by board members who face losing their £80,000-a-year jobs even if the changes are approved at this week’s annual general meeting.

The AGM, to be held behind closed doors at the group’s Manchester headquarters, is expected to be a bitter affair, but sources close to the management are optimistic the core of the reforms will be approved by the 100 regional representatives.

But reformers have raised fears the plans will still not be implemented by the 20 board members.

Better days: A Co-op shop in the 19th Century

The AGM will vote on four motions: replacing the existing board with a new, ‘qualified’ board; setting up a separate structure to hold them to account; moving to a ‘one-member, one-vote’ system to elect a members’ council; and setting up new protection against demutualisation.

Implementing the changes will be the responsibility of the board. ‘They could say they will support reform and then not do anything about it,’ said one source.

The core reforms emerged from a report by Lord Myners into the Co-op’s structure which has fuelled bitter disputes.

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Alongside criticism of the bank’s board, Myners suggested the membership fee could rise dramatically from £1, unchanged since the mid-19th Century.

The former City Minister, who unexpectedly quit the board last month, said that if the fee had kept pace with inflation it would be £90 and if it had kept pace with wages it would be £675. Reformers say raising the fee could encourage members to make their voices heard.

With the near-collapse of the Co-operative Bank last year fresh in their minds, and the group’s own £2.5billion losses revealed only last month, the stakes are high.

Myners said that if the group cannot overhaul itself, it faces a future of decline and being forced to sell prized assets to pay off huge debts.

Traditionalists counter that the reforms proposed by Lord Myners, will undermine the basis of the group’s democratic structure.

The group’s chairwoman Ursula Lidbetter has said: ‘When you speak to members, they are almost unanimous in saying we need to reform.’

The 100 delegates at Saturday’s meeting include the board members plus 80 individuals from regional boards.

Those boards are themselves elected by area committees, which in turn are voted for by the group’s eight million members although it is thought the vast majority do not exercise their vote. Critics argue this puts huge distance between decision-makers and members, and makes the outcome on Saturday uncertain. One insider said: ‘It’s nigh-on impossible to tell how the votes will go.’

While the headline features of Myners’ report are well known, his 183-page report also highlighted a litany of other problems. Accountant PwC is investigating how money is doled out to charities and causes by local area committees of the Co-op – amid fears that there are no effective controls in place to ensure the money is not distributed corruptly.

Myners has directly criticised existing board members saying some should have resigned after the financial disaster at the group and its banking business, control of which has been given to creditors.

Importantly, Myners’ report also suggested the Co-operative Group should be asking itself whether it wants to stay in retailing at all.

When it was founded in the mid-19th Century, a co-operative structure had several advantages in dealing with powerful wholesalers.

‘UK retail suffered numerous market imperfections. This made it worthwhile for consumers to establish co-operative buying groups to achieve scale and bargaining power with wholesalers,’ Myners wrote.

That has changed and the group’s share of grocery retailing has declined from 20 per cent in the 1950s to just over 5 per cent today.

The report warns that the Financial Conduct Authority could investigate leaks from the Co-op board including details of the salary of the now departed chief executive Euan Sutherland. A probe into the leaks by private investigators Kroll led to the sudden departure of one board member Stuart Ramsay this month.

One thing the eight million members will not be able to do is follow next week’s meeting closely. It will, as usual, take place in secret with no ordinary members or journalists admitted, unlike the vast majority of company shareholder meetings which operate an open door policy.

‘One might have thought that a democratic, transparent organisation would let the press in,’ Myners said last week.

Whatever the outcome it is unlikely to mark the end of the bitter battle for the soul of the Co-op.